Maggie's Farm

BD..appreciate the sensitivity to GA folks for displaying THE BIGGEST SON OF A BITCH to ride for the union. He went way beyond what was necessary in his "March to the Sea" and there is no forgiveness in a true Southerner for his actions.

The cause of his death is "Unspecified" but one can always hope that it was excruciatingly painful and lingering with no antidote available.

Ok on a cheerier note and not knowing where to display it, I will choose here. It is after all about money and this is a thread concerning St Gaudens.

Waiting for 'The Big One
by WILLIAM GREIDER

[from the September 10, 2007 issue]

Wall Street did not get to the beach this August, and the guys in good suits are looking rather pale. I don't expect this financial crisis to turn into "the big one," a total unraveling that makes the history books. But nobody knows, and that's what makes it scary. In the past few weeks the magical computer programs that tell hedge funds and brokerages when to buy and sell stocks, bonds or more exotic financial instruments failed. And they took a lot of smart money right over the cliff, accompanied by some prestigious names. Bear Stearns had to shut down two imploding hedge funds. Goldman Sachs had to rustle up $3 billion to keep one of its hedge funds from collapse. Kohlberg Kravis Roberts (KKR), the notorious takeover firm that has cannibalized so many corporations, experienced similar embarrassment.

When the big boys get blindsided, it rightly scares the crap out of lesser players, who rush for the door but can't get out. First they try to dump their fishy-smelling mortgage securities, but nobody will buy them. Then they decide to raise cash by selling some of their good paper. Nobody will buy this either. For the moment, sophisticated, overconfident financiers have lost confidence because they cannot calculate the value of their own product.

It is the oldest story in financial markets, the tug-of-war between fear and greed--and once again, fear is winning. This crisis is one more flashpoint reminding us that the country's economic well-being is held hostage by the "modern" financial system, with its fallible computer models and extreme oscillations between excess and panic. Our dependence started with financial deregulation twenty-five years ago, but the dangers have grown steadily larger, still unaddressed by the political system.

Saturnino Fanlo, the chief executive who supervises KKR's embattled financial fund, made a revealing comment to the New York Times on August 16. Fanlo said he has been through many financial crises, and "this is the most disturbing liquidity crisis, with real impact throughout the economy if it does not rectify." How many times must we flirt with "the big one" before it finally arrives ?

Our vulnerability is embedded in the new illusions created by the deregulated system. Basically, skeptical bankers overseeing loans were replaced with computer models. The abstracted market analysis knows how to crunch the numbers for the new financial instruments but is not so good at knowing the value of the underlying assets the "paper" stands for. The players who originally make the loans escape personal liability by bundling dubious mortgages into bonds and then selling them to financial markets. The downstream investors who buy these mortgage securities never see the houses or the homebuyers who borrow the money. The investors figure that if something goes wrong, they can always sell the paper to the next fool. Just in case, investors and financial firms purchase hedging "derivatives" from the banks, which supposedly protect them against risk. But derivatives are another financial time bomb. Nobody knows whether these gimmicks will actually work, especially when everyone is trying at once to collect on them. In a storm of defaulting loans, the flood of cross-claims could bring down the banking system.

The nation's greater risk is that Wall Street's gyrating hope and fear will end up poisoning the larger economy. The Fed has held credit tight for more than a year, but despite its official claims, the economy is not "robust" for ordinary people, only for capital and corporate profits. For months, the economic numbers for employment, incomes and consumption have been quite soggy. The CEO of Wal-Mart explained why his sales are down: "Many customers are running out of money at the end of the month." Did anyone in Washington hear that?

Given Wall Street's panic, business and consumers will naturally be more cautious about new deals, purchases and borrowing--the correct behavior for them. Unfortunately, it's the wrong medicine for the economy, which is profoundly unbalanced in old-fashioned ways: Wages and salaries have fallen steadily as a share of GDP, while corporate profits have hit a forty-year high. The Federal Reserve and its complicity with the carefree financial markets has pushed the rewards in one direction for roughly twenty-five years, and it shows. Financial wealth soared, while consumer incomes faltered and failed to sustain people's standard of living. As a national economy, we borrow to buy, both at home and abroad, and that elixir is losing its magic too.

Ben Bernanke, the new Fed chairman, may become the scapegoat for the crimes of his predecessor. Alan Greenspan favored capital over labor at every turn and was always oblivious to Wall Street excesses--except when the industry needed a bailout. This made the financial players more irresponsible, because they knew Greenspan would be there to save them [see Greider, "The One-Eyed Chairman," September 19, 2005]. This time Bernanke may have been slow to act because he wanted to avoid another bailout. If so, this was a righteous position, but lousy timing. His discount-rate reduction is not enough. The Fed needs to skip the theory and act forcefully to stimulate the real economy.

In another era, the government would have responded aggressively by providing temporary relief to failing mortgage debtors and other innocent bystanders, cutting interest rates and shoring up the financial system with easy liquidity, then maybe punishing a few Wall Street rogues to show the country that irresponsible behavior would no longer be tolerated.

Given the government we have, that kind of Keynesian response seems less likely. The Fed is now loaded down with orthodox conservatives, even a few totally frothy right-wingers. Bernanke must find the nerve to dust off the regulatory powers and turn them on Wall Street. Make bankers open up their loan windows and start handing out easy credit to troubled institutions in finance and business. The Fed can clean up the mess later.

Congress should step up too and start re-regulating the financial system. I am not even sure if Democrats still understand how to do this sort of emergency stimulus, or if they still believe in it. For me, the political uncertainty is part of the potential crisis. This is a situation where the people are not going to condemn politicians for overreacting to the risks. But people will never forget a political party that failed to act in time.

The One-Eyed Chairman
by WILLIAM GREIDER

[from the September 19, 2005 issue]

When Alan Greenspan retires as Federal Reserve chairman early next year, we can expect waves of adulation for his extraordinary eighteen-year reign over the American economy. The financial press is already offering nostalgic retrospectives on the highlights: the crash of '87 and rapid rebound, the chairman's total victory over price inflation, his swift interventions to avoid financial panics and to reverse the stock market's massive meltdown of 2000-01. In tempestuous times, this Fed chairman acquired a godlike aura--the inscrutable wizard with a nerdish charisma, his wisdom cloaked in financial doubletalk. How will the nation get along without him?

What He Leaves Behind

Which brings us to current circumstances. The Greenspan era, unfortunately, will not end when he departs. The instabilities and ruptures he sowed will still be with us, and he would be wise to get out of town before people recognize the full depth of his destructive legacy. The US economy is not strong and self-confident or even especially efficient. It is stumbling along under subnormal conditions, losing ground and taking on enormous debt from abroad. Nor is the United States free of the follies and risks generated during Greenspan's reign, including financial delusions and the threat of deflation. His successor will presumably be a right-winger too, but one hopes for a more supple, flexible intellect.

The weak-willed economy is an apt illustration of where Greenspan's lopsided policies have led. Four years after the 2001 recession ended, the economy is still struggling to overcome its "jobless" recovery (or "job-loss" recovery, as manufacturing unions call it). Corporate profits have rebounded to extraordinary levels, but companies are reluctant to invest the capital. Wages, meanwhile, remain flat or falling, especially for working-class occupations. Forty-six months into this expansion cycle, the total hours worked in nonsupervisory jobs have risen only 2 percent since the recession ended--compared with rebounds of 9-16 percent after the four previous recessions. Manufacturing, once the vital core of US prosperity, is still losing jobs every month. Its total working hours are down 9 percent since 2001.

This is the most sluggish recovery on record, which seems to puzzle the Fed chairman. But it reflects the Greenspan style of running things; he presided over a similarly tepid recovery in the early 1990s. Tom Schlesinger, director of the Financial Markets Center, a monetary-policy watchdog, thinks the lopsided economy is the most disturbing hallmark of Greenspan's governance. "The Fed has said almost nothing about this, except [vice chairman] Roger Ferguson says there's nothing the Fed can do particularly," Schlesinger complains. "The jobless recovery appears to be a new feature of the US business cycle. Yet the principal agent of economic management says nothing."

http://www.thenation.com/docprint.mhtml?i=20050919&s=greider

This is another article that is welll worth the time invested in reading it.( it has length) Those of you who were in the "Greenspan is God" camp, I suggest a shot of bourbom before reading.

Yes Retriever, those lovely hedge funds that get such support from those who proclaim, "Well they do this, and they do that etc ad nauseum"

Well, RIGHT NOW the EXPERTS can't even tell you what the hell the hedge funds are doing. Are they doing good? are they doing bad? And most ghastly of all from the big brains....what are they worth?, how do we value them in todays market? They can't tell you, cause they don't know, haven't a CLUE.

We do have this admission as clear as the finest crystal...they haven't a clue, BUT their gut feeling is FEAR.

And you're right, Wall Street could give a damn about the average investor...actually less than a damn, because behind his back they ridicule the great unwashed as having no brains because they haven't passed the Series 7.
Been there ,experienced it, talk from knowledge not speculation ...

Roger,
I believe you're correct although the vacant eyed stare that he had when he left the army early in the war due to mental illness isn't there.

Fortuneately for the North the alcoholic Grant talked his buddy, the mentally ill Sherman to reenter the Army. An so it went , military strategy by blind rage with Grant's horrific waste of life at Cold Harbor and Shermans barbaric Saddam like manic raping of the South. Historians have noted that Sherman did not really have an Army, he had a riotous gang of thugs he did not control, and allowed it to occur. A truly great leader of thugs, not men at arms. A true son of a bitch.

Juan Paxety's family experience is not atypical of what Sherman did. He made war on unarmed civilians , allowed his army to turn into a mob and performed what can and should be addressed by their proper name...war crimes. That the north won he escaped the hangmans noose.

No , I haven't got the wrong guy. He was the Hitler and Saddam of his day. He knew exactly what he was doing as he salted the growing fields and burned the homes of even the non slave owning Souhterners.

There is no man hated more in the South than that man. With good reason.

Tom,
I must admit in all fairness and through the flames of my vitriol that were I a general today I would kill and conduct war in the manner that Sherman did.

It is my cognitive dissonance I recognise clashing with my heritage and being on the receiving end of the man who many say was the "first modern general"

But I still don't like him.

Excuse me for a moment folks but my froth runneth over and I need a few Bounty..the quicker pick'r upp'r

Let's see Sherman ...check
Hedge funds & FED...check

Yeah make that four Bounty paper towels and a cold compress.


..a small voice from within..it'll be OK Habu , you can watch a John Wayne movie tonight, probabaly "The Searchers", and it'll be ok..... whew!

Gentlemen All:

As I stated above it is a bad case of cognitive dissonance colliding with my Southern heritage. As mention if I were a general today I would fight in the same manner Sherman did. I wouldn't give a hoot about collateral damage or worry about civilian casualties. I'd just leaflet an area and anything in that area after the appointed hour would die.....no Sherman did his job the only way to do it and win that war..it was the South that gave him no choice..man is that painful to write.